Despite sustained high GDP growth in India, latest estimates of global poverty by World Bank suggest that India has more people living below US$ 2 than even sub-Saharan Africa. These new figures should compel political leaders and policymakers to devise fresh strategies to reduce poverty.

None other than the World Bank (WB) has busted the hype about India’s post-liberalisation success. According to the Bank’s new estimates not only is India home to roughly one-third of all the poor in the world, it has a higher proportion of its population living on less than $ 2 a day than even sub-Saharan Africa.

Compared with India’s 828 million people, or 75.6% of the population living below US$ 2 a day, sub-Saharan Africa, considered the world’s poorest region, ranks better with 72.2% of its population – about 551 million people – below the US$ 2 a day level.

India has 456 million people, or around 42% of its population living below the new international poverty line of $ 1.25 a day. The number of Indian poor constitutes 33% of the global poor – pegged at 1.4 billion people.

New estimates

The new estimates are based on recently re-calculated purchasing power parity (PPP) exchange rates that make comparisons across countries possible. The new PPP has been arrived at as “the average poverty line found in the poorest 10-20 countries,” according to the Bank’s briefing note.

In other words, nearly five out of 10 Indians live below what the world’s poorest countries consider the poverty line.

These sobering figures have emerged from the World Bank’s latest estimates on global poverty, and clearly hint at the fruits of economic benefits having failed to trickle down to India’s poor.

The data available shows that the rate of poverty decline in India was faster between 1981 and 1990 than between 1990 and 2005. The poverty rate – those below $ 1.25 per day – for India declined from 59.8% in 1981 to 51.3% by 1990, or 8.5 percentage points over nine years. Between 1990 and 2005 it declined to 41.6%, which is a drop of 9.7 percentage points over 15 years, clearly a much slower rate of decline.

These new figures should give India’s leaders, policymakers and economic think-tanks sleepless nights and compel them to take a fresh look at strategies to reduce poverty.

Cost of living higher than expected

Martin Ravallion, director of the World Bank’s Development Research Group, said: “Our latest revision of poverty numbers is the largest revision yet because of important new data revealing that the cost of living in the developing world is higher than we thought.”

The authors find that though estimates of the number of poor have increased, the rate of poverty reduction in the developing world is still as strong as when poverty was viewed through the lens of the 1993 price data.

The World Bank has not yet released the full report; the estimates are based on a briefing note issued in Washington.

New estimates say: “India has maintained even progress against poverty since the 1980s, with the poverty rate declining at a little under one percentage point per year.”

In February this year, the Bank’s World Development Report revealed that greater investment in agriculture in transforming economies like India was vital to the welfare of the rural poor.

Agriculture key to reduce poverty

Titled: Agriculture for Development, the report warned that the international goal of halving extreme poverty and hunger by 2015 would not be reached unless neglect and under investment in the agricultural and rural sectors over the past 20 years was reversed.

It should be noted here that the current World Bank commitments in India’s agriculture, irrigation and rural livelihoods amount to US$ 2.6 billion. Over the years, agriculture in India has seen a steady decline in investment – a matter of great concern.

Across developing world

The new estimates show that poverty has been more widespread across the developing world over the past 25 years than previously estimated. But there has also been strong – if regionally uneven – progress towards reducing overall poverty.

The World Bank makes the point that while raising people above the poverty line is a relatively achievable task – it believes poverty levels in 1990 can be halved by 2015 – it is proving extremely difficult to raise them above the $ 2 per day mark.

The number of people in the developing world below this level has in fact gone up marginally from 2.5 billion to 2.6 billion since 1981.